23 Oct 14 McDonald’s CEO reveals the brand’s four biggest problems
McDonald’s is struggling to get back on top. The fast food giant reported this week that global same-store sales dropped 3.3% in the third quarter. The company has lost market share to fast-casual brands like Chipotle and better-burger restaurants like Five Guys.
McDonald’s CEO Don Thompson (pictured) has told analysts of the four biggest issues facing the brand — and how he planned to fix them.
1. Offering the best value. McDonald’s spent several years experimenting with high-end items like Angus beef burgers and Chicken Selects. By focusing on this, McDonald’s ignored one of its biggest strengths.
“Value is one of our grand pillars,” Thompson said. “So we must continue to fortify our position within this key consumer attribute.”
The brand is luring back cash-strapped customers with offerings like the low-priced Jalapeno McDouble and Buffalo Ranch McChicken.
2. Customer service. McDonald’s drive-thru wait times have gotten worse over the years, in-part because of an increasingly complex menu. Thompson acknowledged this problem and said that the company was sending corporate representatives in for a “service reset.” This could include adding more workers and assigning new tasks to existing ones.
The company is also remodeling European kitchens for faster food assembly.
3. Marketing. Thompson is aware that many view McDonald’s as unhealthy junk food. This problem has been exacerbated by a food factory scandal in China. To improve public perception of the company, McDonald’s is doing a global audit of the marketing department. Thompson said he planned to make new internal hires.
“We are also strengthening our creative messages by placing greater emphasis on the quality of our food and again re-establishing the emotional connection that our customers associate with the McDonald’s experience,” Thompson said.
4. Simplifying the menu. McDonald’s menu has grown 70% since 2007. The new menu items are a burden on employees and have helped contribute to long wait times. Franchisees are also angry about the overloaded menu, saying that the extra ingredients and equipment were costing them money.
Thompson stressed that the restaurant was going back-to-basics.
“We are streamlining our merchandising menu board and product offerings and in addition to making it easier for customer to order their favourite products, this will reduce complexity in our restaurants which in turn should enhance accuracy and speed of service,” he said.
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“Over the last decade there has been a noticeable shift among consumers away from traditional fast food and casual dining chains, to fast-casual restaurants as customers are looking for better quality food, served in a convenient format,” says Chipotle founder and co-CEO Steve Ells.
He adds consumers turning away from fast-food companies have enabled Chipotle’s success.
Chipotle is known as a fast-casual restaurant, meaning that it doesn’t offer full table service but promises higher-quality food than that offered by fast-food chains.
“The companies that have lost the most customers over the last decade are traditional fast-food chains, while the biggest gains go to fast-casual restaurants,” Ells says…..